Political Forces Chapter 9 Ideological Forces n Communism

Political Forces Chapter 9

Ideological Forces n Communism n Who controls factors of production? n n Why did it fail? Capitalism n n Expropriation Confiscation Are any organizations government-owned? Socialism n n European socialism Developing countries

Conservative v. Liberal n Conservative n n Liberal n n Right wing Left wing Political advocacy groups

Government Ownership n Why? n n Five reasons Unfair Competition? Can lower prices n Cheaper financing n Government contracts n Export assistance n Can hold wages down n

Privatization n n “Transfer of public-sector assets to private sector, the transfer of management of state activities through contracts and leases and the contracting out of activities previously conducted by the state. ” Examples 1985 -2002: $525 billion assets privatized US privatizing? Example: Water in the UK

Government Protection n n Gulf War Terrorism Italy n September 11 n Department of Homeland Security n Other changes n n Other groups

Government Protection n Terrorism (cont’d) n Kidnapping n n n Columbia & Peru Pay the ransom? Countermeasures n n n Cassidy & Davis International Training, Inc. Other terrorism n n Ethnocentrism Nuclear terrorism Chemical and biological terrorism Islamic fundamentalism

Government Stability n Government is stable if Maintains itself in power, or n Its fiscal, monetary, and political policies are predictable and not subject to sudden, radical changes n n Unstable Lebanon n Zimbabwe n

Traditional Hostilities n n Arab Countries – Israel Hutus & Tutsis n n Tamils – Sinhalese n n Sri Lanka Albanians, Bosnians, Croats, and Serbs n n n Massacre Retribution Zaire Ethnic cleansing United Nations & NATO South Africa

International Organizations n United Nations n n n n Main functions Transnational Corporation Division UN Conference on Trade & Development IMF GATT/WTO OPEC EU OECD

Country Risk Assessment n “Bank or business having an asset in or payable from a foreign country or considering a loan or an investment there, evaluates that country’s economic situation and policies and its politics to determine how much risk exists of losing the asset or not being paid. ”

Country Risk Analysis n n Five Types of Risk Information Content n n Nature of Business Length of Tome Required Who does a CRA? Lessons of International Debt Crises n n n External shocks occur to developing countries Economic policies impact default Need substantial growth Social and potential political costs of development Ripple effects